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Helping Your Kids Buy Their First Home · The Jon Sanchez Show

• Jon G. Sanchez: The John Sanchez show on News Talk780KOH. Pleasure to be with you this Thursday. One more day to go in the work week. Can you believe it's already here? Aaron Clark of Adrility. Aaron Clark, Edge Realty: Yeah. I'm excited to be here. Jon G. Sanchez: ⁓ No, I mean can you believe it's already almost Friday tomorrow? Aaron Clark, Edge Realty: I know. And I can't believe how quickly summer's going. I was telling my wife the other day, I was like you know, she still s she said like she said something that was like, you know, once things get settled after summer just started, we'll do X. I'm like, you know that w it's more the opposite. It's like summer's almost over and then we're gonna do s you know, the the the fall stuff. The kids are starting school here in like a few weeks, you know. It's by quick. Jon G. Sanchez: It isn't that yeah. I did the same thing. Yeah. Y yeah, exactly. Exactly. It is indeed. Before we know it, it's gonna be Christmas time. As soon as you get past as soon as you get past Day, it's just it's downhill to the end of the year. That's right, though. That's all right. How are you doing? Other than that, good? Perfect. Perfect. Awesome. Well, we're a little technical difficulty ⁓ with Dwight, so hopefully he's ⁓ able to reconnect here momentarily. But if not, we will ⁓ we will man the ship as the saying goes. Let me tell what we have lined up for you today. Aaron Clark, Edge Realty: ⁓ don't say that. I know. I'm doing good. I'm doing real good. Yeah. Yeah. Jon G. Sanchez: You know, this is no surprise, of course. Many of you are are dealing with this at this moment as we speak with your children, maybe your grandchildren, or maybe even yourself, right? that is affordability. How in the heck is anybody going to afford a new house these days? And especially tough on the first-time buyer. And again, many parents are sitting back going, you know, son, daughter, man, I wish you, you know, I you knew what it was like when we bought our first house. I matter of fact, Aaron, I was kind of prompting me to think about this. I was I was telling my wife this story just last night. And I you know, first time that I moved to Nevada, because as the audience knows, my whole childhood was I lived four years in Reno or surrounding areas, four years in in Lancaster and Southern California. My dad was an aircraft engineer and he had he worked for Bill Lear for first on the Learjet, then other projects. Well, Lear would run out of money about every four years. My dad get laid off. We moved to Southern California, back to Lancaster, he'd go to work for Lockheed or you know, one of the defense contractors, Democrat gets elected, cancels the program after, you know, four years, and then here we come. I mean, that was literally from from left Southern California right before I started first grade, and it that's just the way it went my entire life until I graduated Wooster in eighty two. So back and forth every four years. But I telling her, I said, you know, when bought our house, my parents bought our house the first time we moved to Nevada and ⁓ this was early 70s in Washville Valley, they bought a brand new house, three bedroom, two bath. I'm I I think it was maybe fifteen, sixteen hundred square feet I think it was five or ten acres for twenty five thousand dollars. Twenty-five thousand dollars. Can you get a car for that price, right? And so, you know, that's ⁓ that's a lot of parents are, I think, having the discussion with their kids about and saying, you know, feel bad for you that you got to go pluck down six hundred and seven hundred thousand dollars to get into your first time home ⁓ when I able to do it for twenty five, thirty, fifty thousand, whatever it may be. Aaron Clark, Edge Realty: Yeah. Jon G. Sanchez: So we thought today we would focus in on you, the first-time buyer, or your children or grandchildren who are first-time buyers. going to discuss the many ways that parents can help their children purchase their first home. We're to discuss the financial, the tax, the estate planning side, all these different considerations, and give you some advice on how every family should understand this before making the decision. Because, you know, I know your kids aren't old enough yet, but I've I've helped out my children. ⁓ one of them at least, getting their first house. And tell you, it was, I've I've shared this with a lot of people. and yeah, obviously Corey was the was the agent on there. It it was the most rewarding thing that probably I've ever done, you know, as a parent. It just that day seeing that clo that that house close escrow ⁓ and so and so forth. And so, you know, I think a lot of parents that maybe haven't experienced that, but those that have said, yeah, that was one of the best things. And you know, hopefully things worked out for them. Aaron Clark, Edge Realty: Yeah. Jon G. Sanchez: But it's an interesting topic. Aaron Clark, Edge Realty: Yeah, I would say it's probably the number one piece I have with people, whether they're a client or a family member that's thinking about it or a friend or just, you know, standing in the grocery store and hearing people talk about it in line or at a restaurant in the back behind you, is whole affordability thing for their kids. And and I hear all the time people say, you know, how are my kids ever gonna buy a house? They're gonna have to move away. They're gonna have to move away. That's all I keep hearing. And Jon G. Sanchez: Is it really? Sure. Yeah, how might ⁓ they arranged it? Aaron Clark, Edge Realty: I mean, there is some reality to that. We we have become an expensive market, kinda like California is. But you know, like your first house at twenty five thousand dollars, like I mean a high income at that time was twenty-five thousand dollars a year. So there is a yeah, there there's a relativity. Like I I tell my kids, I'm like, Man, I I remember making six bucks an hour working at the airport when I was eighteen years old and I was moved out on my own. That was that was plenty of money, you know, right out of high school. So Jon G. Sanchez: Yes. Yeah. You're absolutely right. That's about what my dad made. Yep, you're right. It's a good point. Sure. Sure. Yep. That's right. That's right. Aaron Clark, Edge Realty: There's a relativity to it, but it i and so I get that and there there is a fear factor of there, but seeing the prices jumping so quickly, I think in the last five to ten years has been what's really pushed people to think that way. And there are strategies like we're gonna talk about, and there are there is some creative stuff you can do to help kids get in because you know, I always tell people I go, you know, you've heard the saying a a rising tide raises all ships, right? So if you can just get ⁓ into something. Jon G. Sanchez: Uh-huh. Right, right. Aaron Clark, Edge Realty: Like even if it's just a condo that is cheap, it may not be the best place. It might not even be a place they're gonna live in for three to five years. Something to just kind of start moving with that equity that's moving up and down, then they have a higher step to launch from, you know. So just getting something, there's ways to do it. Jon G. Sanchez: Yes. Exactly. Mm-hmm, mm-hmm. That time. Yeah. Yeah. Right, right, right. I w I want to go back to one point you just said it was ⁓ fascinating about the income, you know, relative to the price of homes. So you're right. And and again, you just brought this back. Yeah, my dad was making about $25,000 a year working for Bill Lear on the Learjet. The house was $25. But let's take it, let's let's take it to the same perspective. Our our our median income in Nevada now is what, $56,000 somewhere around there? Median price is six hundred and thousand. So somehow, some way it became disconnected. Aaron Clark, Edge Realty: Yeah. True. Yeah. Yeah. Yeah, but we also had and we also had thirteen percent rates. Now now we're talking about how it's catastrophic, we're at six and a half. We should be so much lower. Th so there I mean, there's definitely an increase, right? For sure. The the value of the dollar is has definitely changed. But it there I mean, I know I see people that they're coming out of their career path making Jon G. Sanchez: And interest rates, and I remember him that's right. I was just gonna say they had, I think, thirteen. Yep. Yes, yes. Right. Yes. Aaron Clark, Edge Realty: Hundred and fifty thousand dollars a year and it's like that's what most people would cap out at, you know, and that's our starting salaries. So you know, there is something to be said about all of it. We'll we'll find we'll find the grooves to get into to make it successful. Jon G. Sanchez: Yeah, yeah. Yeah. No, you're right. You're right. Yeah. Exactly. Exactly. We're gonna solve the problem for everybody out there. No doubt about that. right, let's get down to ⁓ today's stock market activity. once again, ⁓ we launched another attack against Iran ⁓ right before the stock market closed. Stock market went, okay. Yeah, what else is right? Yeah, you're right. Yeah, I mean that's literally literally what it is. Every time I see the headline come across, i ⁓ i I think, this is gonna be it. And Aaron Clark, Edge Realty: That's right. I like that analogy. That's a good one. Jon G. Sanchez: Just not happening. Market just does not care about it whatsoever. What the market does care about is what's going on with semiconductors. And we can get into memory trips or or specific semiconductors. Bottom line is anything semiconductor related these last couple days has been terrible. And this is what drug the market down today ⁓ the semiconductors. You had this one, I don't know if you followed this, Aaron. They they went IPO on the NASDAQ. They're a South Korean ⁓ chip company ⁓ SK Heinex. S K H Y is the symbol. I'm sorry, yeah, South Korean. had a ⁓ fairly successful IPO last I think it was last Friday if I remember correctly. it has just been a slow, steady decline. And it's it has been dragging. I think we had one day this week where the stock actually went up, but every other day, including today, it came down. And then what happens? Everybody else sends t tends to follow along with it. Because again, this is a hot IPO and they can't, you know, go up. What's going on with everything? So that one of the major culprits today. That stock ended up losing $24.15, 13.69% loss to $152.31. You then had Taiwan semiconductor, one of the stars of the semiconductor arena, had great earnings numbers. They came down in sympathy of SKHY. Taiwan today was down $9.42, 2.25% loss to $410.06. ⁓ Sandisc, $203.92, 12.63%. Seagate down 10%, $82.81 pullback. so that's on the semiconductor side, but hey, we got a whole nother area called technology, right? Information technology. Apple, a great performance today. $5.76 increase, one and three quarters percent, 333.26. Microsoft up $5.47, 1.38%. Google and and ⁓ Meta in that space, not quite so fortunate. Google gave up sixteen dollars and forty cents, four point four three percent, closing at three fifty-three eighty one, meta down about ⁓ two almost two and a half percent, sixteen dollars and seventy-seven cents. and ⁓ Amazon down five dollars and seven cents. So we're ⁓ We're really getting into this diverse market. ⁓ again, it's nice to see the the you know the dollars being spread among other areas that are not, you know, specifically on the tech side. Like for example, Cocoa's up two dollars and forty-seven cents today, three percent. Walmart up two, you know, two point one five percent or about two dollars and forty two cents. So we're seeing a lot of this rotation going on. ⁓ we gotta watch as I've been warning, we've got to watch these semiconductors. If they again, it's kind of been the two steps forward. Aaron Clark, Edge Realty: Please. Jon G. Sanchez: one step back type of trading activity. ⁓ if they, you know, if it turns into two steps down, three steps down, four steps down, and then maybe an upday, that's going to drag this market down. The market's very fragile right now, even though we're in the heart of earnings season and earnings have been phenomenal so far. The semis are are just driving everything at this particular point. So we come back, I'll tell you what this market did then we're going to get into our topic helping your kids buy their very first home. Sh Welcome back the Sanchez show on Newstock seven eighty KOH with Dwight Millard of On Q Home Loans. ⁓ Somewhat. Somewhat. We're we're a little garbly with him. Hop hopefully things Dwight, why don't you try talking? Let's we need we need to test this on Dwight Millard: Yeah, hopefully this is better. did some relocation. I'm starting to think it's my computer, John, and not me. Or might be me, though. Jon G. Sanchez: Okay. Well, we just got you graduated out of the flip phone a few weeks ago. So now we need to get rid of the the the the MS DOS computer that you use and get you up to a a a a a more recent one. Yeah. Yeah, really. There really is. There really is. It's a great thing. It's a great thing. No, I think you're good now, buddy. I think yeah yeah, we we don't have video, but we've got audio, so that's a we'll we'll take whatever we can. We need ya. We need ya. Aaron Clark of ⁓ Drew Lily, of course, here. ⁓ Dwight Millard: I know I'm sorry about that. really? There's that there's something other than a flip phone. OK. OK, good. Yep. Jon G. Sanchez: All right, let's get down to again, we're gonna be talking about helping your kids buy their first home. let's you what happened in the market side of things today. Down 106 on the Dow is how we finished again, just a 0.20% loss 52,552. NASDAQ lost 388. where the pressure was, as I mentioned, a 1.47% decline, ⁓ at 25,881, and the SP down 39 points, 0.51% at 7,533. On the commodity side, we give up 64 cents on oil. 78.98 a barrel was our our closing level there. gold prices, boy, they've just been ever since the ⁓ Fed meeting the other day, or excuse me, the ⁓ Fed chairman's ⁓ testimony the other day, they have just absolutely drifting down, just day after day after day, it seems like. And then we ⁓ of course ⁓ turn things over to the bond market side of things. And Dwight, you know, this ⁓ This is an area where again, ⁓ we always love to get your your perspective on this. This is an area that you talk about not budging, two basis point increase today, four fifty seven was the close of the ten year. I imagine we didn't get hardly any action in the thirty year mortgages. Dwight Millard: Yeah, if you remember, John, on Tuesday we were 6.7. Well, we got a real little relief to down to 6.64 yesterday, which is a big move. But we lost four basis points, 6.68 today. So mean, this is just not happy days right now in the the mortgage arena. And it's you know, it's just you get you it's two steps forward and four steps back. Right. ⁓ Jon G. Sanchez: Yeah, yeah, yeah, yeah, yeah, it really is. That's a that's a great analogy. quick question. Is is six seventy, six point seven on on the thirty year, is that a psychological barrier for people? Dwight Millard: Yeah, John, I think I think for the last 10 years, that's become think anything over six, as we saw, you know, we started getting six and a quarter, six and three eights started become a psychological bear. Now you're over six and a half, you know, and then people tend to round up at six eight. You know, you're at now almost seven is kind of how ⁓ people describing it. But it's yeah, it's a it's a difficult, difficult market to even try to, you know, don't try to play the market to lock. You know, you've you've helped me out over the years. Jon G. Sanchez: Yeah. Right. Dwight Millard: But I mean, you just don't play the fire right now because it just turns quicker than you just lose more than you gain. Right? Right. Yeah. Jon G. Sanchez: Yeah. Yeah. ⁓ yeah. Yeah. Absolutely. You know, it's looking I I'm I'm looking at the chart on Mortgage News Daily right now. where we were closest I can get is July seventh of last year. And we're at six point eight. So again, six sixty eight today and six point eight a year ago. So hey, there's the bright news, Dwight. You're less than where you were a year ago, right? Goodness. ⁓ Dwight Millard: Yeah. That is the bright years, but yeah, it's, John, it's just, we're going to have, you know, and you're in just the greatest time in terms of buying, you know, when we started in March and April and May, and it's just unfortunate. They're just stubbornly high. Just going to stay stubbornly high. Jon G. Sanchez: Yeah. Yep. Yep, absolutely. all right, guys. Great job. When ⁓ now let's get over to our real estate topic. Get a head start on this. We got a lot to cover. I do want to mention ⁓ while we're at a break, a news headline came across from True Social that ABC and NBC News have ⁓ decided they will not be carrying the president's speech this evening. Dwight Millard: Mm, wow. Jon G. Sanchez: I I think that will be some some blowback tomorrow that you will if not tonight that you will be hearing from the Trump administration. So yeah, that's ⁓ that's gonna be an interesting one. Of course, no one he's kept us very quiet what he's gonna talk about tonight, ⁓ but many saying that it's gonna be basically digging up you know, all the bones of the election that he lost and he's going back to to the whole election type of ⁓ saga. So I I'm guessing that's Aaron Clark, Edge Realty: And whether you agree with them or not, since when do you decide what news you're gonna report or not? That's a little bit interesting to me. Dwight Millard: Right. Jon G. Sanchez: Right. That's exactly right. Yeah. Yeah. Well, y you know, and and the reason I'm bringing this up is ABC News was or ABC the company was and probably still is skating on thin ice, right? Remember the FCC under Trump's control, of course, has threatened to pull their licenses numerous times with ⁓ Jimmy and all those various late night hosts that you know bash the president and things like that. And ⁓ yeah, they close and as a matter of fact, I think they ended up writing a check for some violations so supposedly. But it's gonna be interesting to see tomorrow if or like I said, I'd be surprised if we don't hear something tonight that you Dwight Millard: You know, but John, to Aaron's point, you don't have to respect the man and what he does, but the office, I mean, it is our prison. Yeah. Jon G. Sanchez: Yeah, the office commands respect. Yeah, absolutely. yeah, we will see. All So that's the ⁓ breaking news there. It always happens during the show. So here we go. ⁓ All So we're gonna get back to our topic today, helping your kids buy your their first home. ⁓ You again, as we said at the beginning of the show, and this is why I'm so glad Dwight was at least able to get back with us because he's done the same thing. He has helped his children buy their first home. And I I want to get, you know, his feelings of what it was like. But ⁓ You know, again, one of life's greatest joys is watching your children buy their first home. It really is. As crazy as that sounds, we know they're supposed to be adults and standing on their own two feet, but hey, they're still our kids and they'll always be our kids. again, in today's housing market, it is such a different story from ⁓ many of us experienced growing up, right? Or were we able to get in for a couple thousand dollars and everything was great. We've got higher home prices, we got higher down payment requirements, we got higher qualification standards, higher closing costs, higher insurance. I mean, the list goes on and on. And so it's causing many parents to ask the very important question, we help our children buy their first home? And we're gonna get started with Dwight's area. But Dwight, before we do, please tell what was it like when ⁓ when when helped your first child get their home? Because I already shared my story. Dwight Millard: Well, John, again, I got a little bit of yours. It was amazing to sit down with Kaden. You know, this was in Texas when he was going to college and he still has the house today, you know, and just signing paperwork with him, taking pictures. It was amazing. You know, in the old days, we called it the kitty condos, right? I mean, it doesn't have to be a condo, but John, saw something the other day, it's a grandkitty condo. So not only are parents now helping, so are grandparents. So it's... Jon G. Sanchez: ⁓ great. You know, you don't you you probably don't remember this, but I remember you and I talking when you were considering helping Caden. And you said, John, I I have to do this. I said, Why do you have to do this? He goes, and you said, It's gonna give him a head start in life, right? It's ⁓ how can I not do it? It's gonna give him a head start. But you said one other thing that has stuck in my mind ever since. You said, John, it's going to teach him financial responsibility. Dwight Millard: Yeah. Yeah. Jon G. Sanchez: And Dwight, I've used that line with with clients and things when they're contemplating it, you know, helping their children out. And I think you were spot on. But now here's the test. How many it's been what, three or four years ⁓ you got him in? Yeah. ⁓ not only I'm sure has he built built a significant amount of equity, but has it taught him financial responsibility like you hoped? Dwight Millard: Yeah, yeah, three years. Yeah. I'm sure. Absolutely, absolutely, John. couldn't keep 20 bucks in his pocket, but now not only is he in this house, he's married now. got a dog. mean, ⁓ everything, right? He gets jumps up, to work. I mean, it's change of, I guess just a of lifestyle, but it has, it's taught all the way down. he has, ⁓ you've been helpful to him the way. Jon G. Sanchez: Yeah. Dwight Millard: many times, but yeah, just has to teach, right? Yeah, yes, exactly. yeah. ⁓ he, ⁓ exciting times. Yeah. Jon G. Sanchez: Hey, he followed my footsteps. Right? He he became a financial advisor. Yeah. And I I re I remember that little that little man sitting in the in our the radio show and watching us and stuff like that. So yeah. I I feel like I have a part in raising your child, Dwight. Yeah. ⁓ Yeah, exactly. Exactly. There you go. There you go. Get rid of that Will word. Yeah. No, it's it's it's it's it's really cool. Dwight Millard: Yeah, it's exciting to watch. Yeah, don't worry. You'll be in the will. trust, we got trust, right? Yeah, yeah, trust. ⁓ yeah, it's ⁓ satisfying and anybody that hasn't done it and is considering it's easy, everything's blended now. And I said, grandparents now are contributing a lot more than you think. to that whole scenario. does teach them right away. And you know, want to be on it because you want to be monitoring, make sure they're making the payments, but there's exactly what he's been doing. So your point, is the, would say he's the role model, the epitome of kind of what this topic is about. Learn the responsibilities ⁓ and embrace and do better every time. Jon G. Sanchez: Absolutely. Absolutely. Yeah, he could have spent the last four years throwing his money away in rent, but instead, yeah, he's I mean, would you mind telling us what you estimate to be the the equity that he has built up already? Dwight Millard: Yeah, no, I, paid, ⁓ back then, John, think we paid about three 10 for it. You know, he's got it bought down probably to two, two 80 ish, let's say, and it's probably three 60, you know, maybe a little more, you know, just depends. So, but he, he, I mean, the fact that his name's on the title is a huge thing. Yeah. It's his, you know? Yeah. Yep. Thanks. You too. Jon G. Sanchez: Nice. Beautiful. Beautiful. Yeah. Yeah. Yeah. Yeah. Yeah. It's his. Yeah. Exactly. Great job. Great job, Dad. Great job. All right. When we come back, you bet. Thank you. Dad number two. When we come back, we're going to be talking about how do you give them the down payment? You know, you do it as a gift? Do you have some strings attached, et cetera? That's where we'll start with Aaron and Dwight. show on News Talk 780KOH with Aaron Clark of Adrility and of course Doha Millard of OnQ Home Loans. All right, on the market side things, once again, it was a little bit of a lackluster session, at least on the Dow side. We kind of struggled for most of day, really could get much traction as I like to call it. Finished down 106 on the Dow. NASDAQ 388 decline, 1.47%, SP lower by 39. Hoping your kids buy their first That's our real estate Dwight Millard: Mm-mm. Jon G. Sanchez: And we're just getting warmed up on this. So Dwight and I have both shared stories of helping our kids out and ⁓ again how rewarding it was. Dwight, let's get down to the brass tax, right? ⁓ down payment side of things, right? We can do a gift, we can, you come on as a as a co-borrower, which we'll talk about later, ⁓ so on so forth. The bottom line is: do you recommend a parent come to the table attached? In other words, get on the or If I'm gonna give them the money, have them sign a a promissory note or just give it to them. Dwight Millard: Yeah, so are two different situations. One is if the the if the child cannot qualify on their own, then coming on the funds that you put into it are no longer a gift. It now is just a blended, ⁓ you asset contribution. But if the child does qualify, but they just need some help with the down payment some closing costs, ⁓ then then only way you can actually really do it is a gift and that the gift mount. Jon G. Sanchez: Down payment. Dwight Millard: as you know, John, think you've said it before, is 19,000 this year. And that's per parent. And then if you are married, they can give it to So it can get up there before you're then actually have to report a taxable transaction. So doesn't mean you're going to have a tax liability. You just have to report it. But remember, a gift is a gift. And whatever they do on the backside, in the back shop, that's between Jon G. Sanchez: Yes, yes, per person. Dwight Millard: other, but it has to be documented and a gift letter signed that it there's really no repayment involved in this. Yeah. Yeah. Yeah. ⁓ ⁓ want to you know what I be happy to see like you said that he how to be responsible that for me would be enough to say, hey, you know what, ⁓ I can away from this. Jon G. Sanchez: Okay, so let's forget about the formalities. Let let's let's talk, you know, as dads. All three of us are dads, so let's talk that way. Come with strings attached or not? Dwight Millard: six thousand or eight thousand, whatever I gave you to help you get jump started. I think if they're not learning their lessons and they keep crawling back to you for, you help me make the payment and stuff like that? I think then maybe you start to kind of have some sort of, you know, something in place that would encourage them more responsibility, financial responsibility. Agreed. Jon G. Sanchez: Mm-hmm. Yeah. Aaron, you're very common sense oriented. ⁓ when the time comes that that of your kids decide to get a house and you and your wife decide to help them out, are you gonna come to the table with strings attached or are you just gonna gift them or give them the money? Aaron Clark, Edge Realty: Hopefully they're not listening 'cause then they'll know my strat, right? No, think it's important to come with strings attached in the beginning. ⁓ just we have you know, respect is earned. The proof that they're gonna be compatible with what they say they're gonna do and be forthw forthright in paying the the payment and taking care of the home and seeing all that, I think would be the caveat to dismiss it later on. But in the beginning I think that Jon G. Sanchez: That's right. Hmm. Okay. Mm-hmm. Mm-hmm. Aaron Clark, Edge Realty: Having strings attached, even I have a lot of clients that I tell them, look, do the strings attached, have ⁓ make some sort of payment or something, open an account for them, stick that payment in the account for them. So if they are and they end up like not making their payments or turn into drugs or some horrified scenario you have built in your mind, you now have enough money to carry the payment so you can sell the property, right? and at the same time, if they are responsible and they're taking care of business. Jon G. Sanchez: Mm, good point. Aaron Clark, Edge Realty: then after they've paid that and you feel like you can eventually surrender that whole ideology over to them and make it their very own, then give it to ⁓ as a gift and it'll help pay for their furnace upgrade or, you know, putting on a new roof. Yeah. Jon G. Sanchez: Mm-hmm. Mm-hmm. Yeah. Nice. That's a good strategy. I like that. Dwight Millard: You know, John, say 40 years, I've probably done several hundred of these and I've never had somebody call me back and say, you know, my son ⁓ my daughter went sideways. need to. ⁓ I do. Yeah, I know, but I do believe that, you know, we're all on to something that, you know, it's performance based. If they do what they say they're going to do and say what they're going to do, then, you ⁓ there's a time to help them out. If you have the means to it, that's. Honorable. Jon G. Sanchez: Mm-hmm. Aaron Clark, Edge Realty: Yeah, it's rare. Jon G. Sanchez: Nice. Mm-hmm. Mm-hmm. Well, you know, it's ⁓ it's funny. I had a conversation with a very dear friend of mine last night, ⁓ we were talking about he he wants me to reach out to his daughter and son-in-law, and get a they're a young couple and get a estate plan written for them. They live back in in ⁓ back east. he said, I just off their mortgage for them. And I I think it was six digits. ⁓ He goes, But it that my way for them to get started, right? And and they've been working hard and ⁓ Dwight Millard: Mm. Jon G. Sanchez: Doing everything you want your kids to do, right? Be being very responsible adults. But he said, I wanted to give them my wife and I wanted to give them a jump start in life. They've had the house for like three years, I wanted to give them a jump start where they no longer have that fifteen hundred dollar a month mortgage payment and on and so forth. And so, you know, he and then the the key, the reason I'm bringing this up, he said, the way I look at it is I just gave them I don't if he said all or a portion of their inheritance while I'm still alive. And I got that satisfaction and Dwight Millard: Mm-hmm. Jon G. Sanchez: seen the tears come out of their eyes when they they were on vacation when he said he pulled them aside and said, Guess what? Mom and dad or mom and I are paying off your mortgage. You know, what? And the tears and so on and so forth. So I thought that was pretty cool way to look at it also. It's like, hey, you're gonna get this money eventually, but I don't need it right now. Like you said, do I just got the financial wherewithal? Let's ⁓ let's let's do it. So ev to each his own. To each his own. Yeah. Whether you want to do strings attached or not, I've had a lot of clients that they they're they're they're down Dwight Millard: Yeah. Jon G. Sanchez: It's mean, i they they go to a lawyer, they get a contract drafted and so on and so forth. That's up to you. It really is. But like I've always said, you can have all the contracts you want in the world. But here's the question you always have to ask yourself. If your kid, you know, can't pay you back, are you gonna foreclose on their house? Probably not. So ⁓ I like Aaron's point. It does show responsibility and you know, it's kinda like a warning to them. It's like, Hey, welcome to the real world. You know, nothing's nothing's for free. So Dwight Millard: And that yeah. Well, and John, I think it's really important to note right now, if that is being explored, especially for 18-year-old, 19-year-old, we to make sure they have a credit res a credit score. So it is important. So you just can't walk in and say, I'm ready, I want to co-borrow with my child. yeah, get them started with a little credit card somewhere ⁓ and get credit going so that at least they have a Jon G. Sanchez: Yeah, good point. What what what a Dwight? I've always wanted to ask you this. What age can you get a credit card? Do you have to be 18 to get it? Day after one day after 18. Okay, so even if they're senior in high school and they've hit 18, good time to do it. Okay, good. All right, my friend, let's go on to strategy number three, right down to your ⁓ your your ⁓ your level also, Dwight, co-signing for the mortgage, benefits, risk, debt to income impact, credit implications, bring us up to date on that one. Dwight Millard: The day after you're eighteen. One day after eighteen. Mm-hmm. Yep. Yep. Eighteen. Yep. Mm-hmm. Well, so the the benefits obviously is that you're gonna get your child into the house. you know, and and and and nowadays what they do, the are you're a co-borrower, co-signer on the loan. So any negative effect, like if you're not monitoring whether or not the you know, your son or daughter made the payment and it goes 30 days late, that that will affect you. So ⁓ you gotta be aware of that. So you are taking on a co b and if they pack up, they meet somebody from Australia and they pack up and move. You're stuck with it. It's it's in your hands now to to finish it out. But debt to income impact, so the nice thing versus several years ago is it's now all blended. So it takes all the income in one bucket and all the expenses in one bucket. And typically the parent, as know, John, covers basically the lion's share of the you know the payments. ⁓ But the impact the cosigner to the parent, here's what basically is the if you're looking at Jon G. Sanchez: That's right. Mm-hmm. Dwight Millard: maybe another real estate purchase. As long as you can show 12 months that child making the payment, I no longer have to hit you with that debt. ⁓ ⁓ a little different than if you're trying to buy a car after you did that or, you know, because ⁓ go a different way. But if you're looking at something, another real estate venture, typically you're going to want to see 12 months that and so it's got to be 12 straight months. You can't have a month all of a sudden, ⁓ they couldn't make it. So I it's got to be 12 straight so that that kind of takes Jon G. Sanchez: Great reminder. So twelve months proving that the child has made the payments, not not that mom and dad Dwight Millard: Child made the pay. Yep. So make sure they get a their own, yeah, make them write their own check and maybe you're on the a account so you can make sure the check cleared, you know, and things like that. credit implications for the child, it's gonna be phenomenal. Their credit score should just be, as long as they take care of everything else, should be amazing because a good on paid on time mortgage is i ⁓ is best credit out there. For the co borrower, the parents, ⁓ probably an initial small hit on that because it's a new debt, but Jon G. Sanchez: Yeah. Yep. Dwight Millard: You know, it doesn't take long to correct that. Jon G. Sanchez: All right. When we come back, we'll go to our next topic, buying the home together. Welcome back to the John Sanchez show on Newstock seven eighty KH. Mr Millard, can we get your phone number, sir? Dwight Millard: Yes, sir. two four zero two zero two two. Jon G. Sanchez: Thank you, sir. Clark. Aaron Clark, Edge Realty: six seven three sixty seven hundred. Jon G. Sanchez: Beautiful. Thank you, boys. right. Now Dwight, we're on to the next strategy. Buying the home together, right? We can do joint ownership, percentage, so on and so forth. But we need to think about exit strategy, buyouts, obviously the estate planning side of things. Folks, this is this is probably a tougher decision than saying I'm gonna gift or lend my kids some money ⁓ because tax there's estate planning ramifications, there's a lot of things. Aaron, let's start with you. Dwight Millard: Mm-hmm. Yeah. Jon G. Sanchez: Buying the home together. Good idea, bad idea. Aaron Clark, Edge Realty: I think it's a great idea. I mean, it's it's sort of like if you're gonna co sign with them, a lot of times I find that what they can afford isn't what you really want them to get into or what they wanna get into. So a way to jump them up into getting something that they're gonna cherish and love and they can be in for the next, you know, long period of time is to buy the home together. And the cool part about that is I mean, not getting into all the the taxes and w how you do things in regard to that, but Jon G. Sanchez: Mm-hmm. Yeah. Aaron Clark, Edge Realty: After a certain time period, because again, you're you're getting them into something, you're locking them into that. And then let's say five years goes by, you buy it with them when they just started their first job and now they're married and whatever else, you can sell them half, if you will, and you can not take a profit and gift them on the back end. So it's like, hey, we bought this house for four hundred thousand, two hundred each, we split the down payment. Jon G. Sanchez: Good point. Aaron Clark, Edge Realty: I got you into this thing. Now it's worth $600. I have $100,000 in equity. We're giving it to you. So we just want our original $200 back. It was just a way to put a savings account aside for you. So I have a lot of clients that do that strategy, or they'll do the strategy of they'll buy rental properties they're eventually going to sell those to their kids. And when they're buying them, their kids are five or ten or whatever. So it's not even I mean, we're talking way, way down the future. Dwight Millard: Yeah. Jon G. Sanchez: That's a great point. You're right. I've never thought about that. Mm-hmm. Right, right. Aaron Clark, Edge Realty: But they're locking in that equitable price rise and fall that the for their kids in the future. So yeah, it's a great strategy to do it that way. Jon G. Sanchez: Yeah. Mm-hmm, mm-hmm. Yeah. I I my most recent one I had a client do that and and went in basically partnerships with ⁓ with his son and worked out just so beautifully. He got some tax benefits, you know, some of the interest write off and so on so forth, 'cause they, you know, they were both on the title and on the loan and so on and so forth. And and then ⁓ they sold it and he did exactly what you just said. He just ⁓ you what? here here's the whatever hundred, two hundred thousand you just made, take it and so on so forth. So yeah, a great idea, Aaron. Great idea. Dwight? Dwight Millard: Mm-hmm. Jon G. Sanchez: What's your opinion on that? Dwight Millard: Yeah, absolutely. I I I like the personally, I like buying the home together versus trying to, you maybe swing it with a gift or whatever. I I like that because it then you get to contribute to ⁓ the of that. I mean, that's what you're trying to do, right? It's just contribute to the success. And then ⁓ to point down the line, you can neutralize it, wash it, let ⁓ have it, whatever. But what a great, what a great thing to leave for your child, you know. And what I like about what we're talking about, John, is what you referred to earlier. get to see it in motion. You don't have to wait till you're, you gone to help your child out. Yeah, yeah. It just doesn't, it, it doesn't this ⁓ think you more satisfaction as you you described than I described. And Aaron will get Aaron will have the same thing. We're we're gonna be able to see the the the the fruits that we so dearly tried to instill in our children. Jon G. Sanchez: In the grave. Yeah. Yeah. So so quick question to I I'm sure this is going through some some of our listeners' minds. What's the difference between cosigning and buying the home together? Or is there a difference? Okay. That's right. Dwight Millard: No, there's no difference. You're both co co borrowers. Joint yeah. And and the way you take title is gonna be up to you guys. I mean, the most common we talked about, but know, is the the right of survivorship, joint tenants. But yeah, you know, there's different ways to look at it. And there's ⁓ and John T you've always said make sure you kind of have an exit strategy, make sure there's an off ramp somewhere, you that if it doesn't feel like it's working out or going, you y you've at least had that discussion at some point in time. Yeah. Jon G. Sanchez: Yes. Right. Right. Right. can also look purchasing the property as an investment. I've had clients do that. They're like, Hey, you know what? I I know tenant pretty well. It's my kid, right? So especially Aaron, you've done you and Corey both have done a lot of business, you know, near in the UNR area where parents are like, Hey, let's just buy the house and we we can buy it together and you know, kids gotta go to college anyway. So that's a good one. again, help them qualify without the the Without giving them the money, like Dwight covered on the tax consequences. Always want to consult your CPA on that, et cetera. So to think about, folks. Again, it's tough for the for the younger generation to get in, and ⁓ you've been blessed to ⁓ have your net worth grow via real estate. So pass it on to the next generation. Hopefully they do the exact same thing. Excellent job, fellas. That was a lot of fun. See you guys on Tuesday. I'll be back tomorrow. God bless. Have a great afternoon. We'll see you later.